Use the Following to Answer Questions

question 124

Multiple Choice

Use the following to answer questions:
-(Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. If Pat purchases one mixer and bakes 400 cakes per day, what is her average fixed cost?

• A) $0.025
• B) $2.50
• C) $1,000
• D) $400,000

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Definitions:

Complementary Relationship

A situation where two goods or services are used together, and the increase in consumption of one leads to an increase in consumption of the other.

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